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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on our SaaS pricing book Price to Scale, adjusting prices based on local purchasing power can indeed be a valuable tool if you’re targeting different market segments globally. However, as we discuss in the book, there are important trade-offs to consider:
• Direct Answer: Yes, you may need to adjust prices for local purchasing power in emerging markets to remain competitive, but doing so introduces additional complexity that must be managed carefully.
• Specific Insights from Price to Scale:
- The book highlights that managing a more complex pricing structure—such as varying prices by region—can increase the costs and challenges associated with change management. This means your sales and operations teams may face extra burdens when dealing with multiple pricing tiers.
- It also notes the importance of aligning your pricing strategy with your overall go-to-market (GTM) approach. For example, companies targeting both mid-market and enterprise segments might need to customize pricing, while others might prefer to maintain simpler, uniform pricing to reduce operational friction.
• Practical Considerations:
- If emerging markets have significantly lower purchasing power, offering lower prices may be necessary to drive adoption and capture market share.
- To balance competitiveness with simplicity, consider pricing frameworks—such as capability-based pricing—that allow you to add options on top of a base fee. This approach can help you scale value without an overly complicated price structure.
• Summary Takeaway: Adjusting pricing for local purchasing power can help you remain globally competitive, but you should weigh the benefits against the increased complexity. Ensure your adjustments are strategically aligned with your overall GTM plan and consider frameworks from our book that help mitigate operational challenges.
In essence, while localized pricing can enhance market penetration, it's essential to manage its complexity thoughtfully to avoid unintended disruptions in your pricing operations.